Pigs and Capital..

7:30 am Once again, the swine flu "pandemic" is a big part of Wall St. news today. Not to be insensitive, but you need to put this in perspective. 36,000 people die in the US every year from the "regular flu". More than 500,000 people worldwide die from the "regular flu" every year. So far, the number of deaths worldwide is in the hundreds. That is not to say things can't get significantly worse, but we need to keep things in perspective. If you are getting outside regularly and not spending significant time in close contact with others, you should be ok.

From a large perspective, there is plenty of precaution out there and there are many measures in place to prevent or contain a massive pandemic. This will continue to be a big news story but the economic implications are probably minimal at this point. That is not to say that it can't get significantly worse, but the implications are small right now.

The other big story is the capital situations of Bank of America and Citigroup. The US regulators are saying both need additional capital. Of course, both banks do not want to show any signs of potential weakness. Both "respectfully disagree" with the government's assessment. The truth probably lies in the middle somewhere, as it usually does. The banks probably need more capital but probably not as much as the government wants.

How to make money? I currently own some BAC Jan 2010 $10 Calls and am short some May $12.50 Calls against it. I will be adding to the $10 Leaps today and waiting to sell some front month calls when the stock recovers. This trade has a long time to work and plenty of volatility to sell while I wait. I really like this trade.

Until next time, stay low risk..